I think it is enabled by default as well; however, I did read somewhere that lower-rank players could play up with higher ranks, but higher ranks can't play down. Can't find the source on that though :/
You could. Explanation below.
Curiosity inquires, however, if one can co-op with a friend in a different block? That may be what havok meant, but I'm still wondering. I understand going online, 8v8, you don't want 20's versus 5's. Just me and a pal running through the story, I'd rather not be blocked because one of us has played the game more than the other.
It is possible for level 20 players to play with level 5 guys. However, because of the level differences, the level 20 guy will have restrictions placed on him so that he cannot use a level 20 ability in a level 1-5 block.
If you are playing co-op, on the other hand, I don't think restrictions will apply at all.